Good Performance Reaps Rewards, NZ Salary Survey

Good Performance Reaps Rewards, NZ Salary Survey Reveals

More and more salaried staff are receiving bonuses, often at the sacrifice of salary increases, the latest New Zealand Salary Survey from Cubiks Limited, previously PA Consulting's assessment and development practice, shows.

Cubiks Limited was established as a new venture company within the PA Consulting Group on 1 May 2000. The New Zealand Salary Survey has been produced for the past 30 years. The survey reveals that the increase in total remuneration, including bonuses and commission payments, for both top executives and general staff is substantially higher than base salary increases.

"We identified this change as a growing trend in our last survey," Kevin McBride, Country Head of Cubiks Limited, said. "The average value of bonuses received has increased, suggesting that more often executives are sacrificing base salary increases for larger 'at risk' or performance payments."

The New Zealand Salary Survey is run twice yearly at 1 March and 1 September and has over 500 different organisations contributing data to it. The survey measures the base salary and total remuneration movement of more than 300 positions.

The proportion of executives receiving bonuses has increased by just over three per cent, with the average bonus 25% higher than 12 months ago. More than half of the top executives surveyed received a bonus averaging $19,650 while a third of general staff received a bonus averaging just under $4,000, an increase of 18 per cent.

"These results tend to suggest that, as trading conditions are improving, the constraints on variable pay are being released and more staff are starting to benefit from higher 'at risk' payments," Kevin McBride said.

Increases in chief executives base salaries are still running well ahead of inflation, the survey of 260 CEOs shows. All top executives received on average a 5.4 per cent base salary increase in the 12 months to 1 March 2000, while general staff received a 3.9 per cent increase.

Both these figures are still well ahead of NZIER's confirmed headline CPI movement figure of 1.5 percent, although the gap is narrowing, Kevin McBride said.

More significantly, the survey also shows that the median value for total remuneration for both top executives and general staff has also increased significantly. In recent years this figure has been moving upwards, but generally at a rate which is lower than the average increases in base salary. The increases this year are 7.2 percent for top executives and 5.1 percent for general staff.

"This indicates that new employees may be joining on higher salary packages, partially in response to a demand for more skilled people, but partially also in response to perception of a need to achieve pay parity with Australian and other international companies. Increases in bonuses and non-monetary rewards are part of this response, " he added. "Whether that perception is justified, is debatable."

The survey also looked at performance management, showing that three quarters of organisations surveyed used a formal performance management system. And of those that don't, almost a third intend to implement one in the next 12 months.

Rewards handed out for good performance differed according to who was receiving them. Chief executives were less likely than other staff to receive salary increases but more likely to receive company shares; management are the most likely to receive a one-off bonus while non-managerial and non-professional staff are less likely to receive incentive payments and more likely to receive non monetary rewards.

"All in all, these results show that New Zealand salaried staff are being better rewarded for good performance than previously, with a number of organisations using 'at risk' payments, rather than base salary increases, as a means of attracting and, more importantly, retaining staff," Kevin McBride said.

Highlights of the current survey include:

* Base salary movement for Top Executives is lower than that recorded in both March and September 1999: - Top Executives 5.4 per cent (March 1999 5.3 percent/September 1999 5.6 per cent)

* Base salary movement for General Staff is lower than that recorded in both March and September 1999: - General Staff 3.9 per cent (March 1999 4.2 per cent/September 1999 4.2 per cent)

* 74.2 per cent of all Top Executives who were in the same position at 1 March 2000 as they had been in at 1 March 1999 received an increase in base salary.

* Increases of over 10 per cent were received by 18.1 per cent of Top Executives; this compares with the 17.3 per cent of Top Executives awarded increases of 10 per cent and above in the year ending 1 March 1999.

* Overall total remuneration movement for Top Executives was 7.2 per cent. This has increased at a rate significantly higher than inflation (1.5 per cent) and is higher than the total remuneration movement recorded in both March 1999 and September 1999.

* The overall total remuneration for General Staff was 5.1 per cent. This figure is higher than the total remuneration movement recorded in March 1999 (2.6 per cent).

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